Understanding Obamacare Exemptions

The March 31 deadline has passed. The new mid-April extended deadline is looming. If you still don’t have health care coverage, you could be facing the individual mandate penalty (aka shared responsibility payment and Obamacare tax) when you file your 2014 taxes next April. On the other hand, you might be exempt. Plenty of people and organizations are.

Under the Affordable Care Act (ACA for short), nearly all adults and children legally living in the U.S. must have health insurance or pay the penalty. But according to Healthcare.gov, the official website for the program, you may qualify for an exemption from the penalty under the following circumstances:

You were uninsured for fewer than 3 months of the calendar year

The lowest-priced coverage available to you would cost more than 8% of your household income

You don’t have to file a tax return because your income is so low

You are a member of a federally recognized tribe or eligible for services through an Indian Health Services provider

You’re a member of a recognized health care sharing ministry such as Medi-Share or Samaritan Ministries

You’re a member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare, such as the Amish

You’re incarcerated and not waiting for the disposition of charges against you

Nothing there for you? Well, wait, there’s more. Within the 3,000-plus pages of the Affordable Care Act you’ll also find a number of hardship categories that exempt you from paying the individual mandate penalty if, during the tax year:

You were homeless

You were evicted in the past 6 months or were facing eviction or foreclosure

You got a shut-off notice from a utility company

You were a recent victim of domestic violence

A close family member recently died

You filed for bankruptcy in the last 6 months

You had medical expense you couldn’t pay in the last 24 months

Your expenses increased unexpectedly due to caring for an ill, disabled or aging relative

You expect to claim a child as a tax dependent who has been denied coverage in Medicaid and the CHIP program

An eligibility appeal decision makes you eligible for enrollment in a qualified plan, lower premium costs or cost-sharing reductions during a time period you weren’t enrolled in a qualified plan

You were ineligible for Medicaid because your state didn’t expand eligibility under the ACA

You experienced hardship in obtaining health insurance

And as if that last item wasn’t broad enough to cover just about anyone who wanted to claim it, toward the end of last year, the Department of Health and Human Services announced that the hardship exemption, “will exempt anyone who had their plan canceled due to the Affordable Care Act.”[2] HHS called this the Hardship Exemption Extension for Canceled Plans, and later updated it so that anyone claiming it is exempt from the individual mandate penalty through 2015.

Qualifying for Exemptions

How hard is it to qualify for a hardship exemption? In most instances, not very. You may need to provide some documentation when you submit your hardship exemption application. For example, if a family member died, you’ll need a copy of the death certificate, but a photocopy of the newspaper obituary will suffice. In some cases – like homelessness or domestic violence – you don’t need any documentation, while in the case of experiencing hardship in obtaining coverage; you need only “submit documentation if possible.”[3] Should you want to take advantage of the canceled plans exemption, all you need to do, according to an article in Online.WSJ.com, is “fill out a form attesting that your plan was canceled and that you ‘believe that the plan options available in the [ObamaCare] Marketplace in your area are more expensive than your cancelled health insurance policy,’ or ‘you consider other available policies unaffordable.’”[4]

Does the wording on some of these hardship exemptions sound vague, arbitrary or entirely subjective to you? You’re not alone. When House Majority Leader Eric Cantor (R-Virginia) learned of the latest exemption, he said, “the loose wording essentially excludes everyone from the individual mandate.”[5]

The reality is, if you want to avoid the individual mandate, you can probably qualify for an exemption. But if you want to make sure you and your family members are protected should one of you become ill, you can shop for health insurance quotes online here.

[1] “How do I qualify for an exemption from the fee for not having health care coverage?” https://www.healthcare.gov/exemptions/